November 19, 2013

New Class Action Filed against Apple regarding iOS Maps

A new class action came to light today that was officially filed against Apple late last Friday by Nancy Romine Minkler. The class action regards Apple's marred iOS Maps app. The class action lists seven cause of action ranging from unfair competition to violations of false and misleading advertising to breach of warranty through to negligent misrepresentations. It's a bit of a head-scratcher of a Class Action. I mean, who buys a new cellular phone solely on the basis of a maps app that's accurate 99% of the time? Can anyone really sue Apple for mapping information that is incorrect less than 1% of the time? Yes they can. But whether they'll win is another matter. Our report presents you with an introduction to the Class Action and the full list of the seven counts against Apple as represented in the court document.

Class Action Introduction

This is a class action brought on behalf of the Plaintiff and other purchasers of the Apple iPhone, iPod touch and/or iPad mobile devices (the "Apple Devices") which utilize Apple's iOS operating systems 6.0, 6.1.3, 7.0, or 7.0.3.

One such App is Apple's "Maps" App. The Maps application has been featured on the iPhone operating system since the release of the first-generation iPhone on June 29, 2007, and was powered by Google Maps from then until September 19, 2012. A new version was announced by Scott Forstall in a keynote address at Apple's Worldwide Developers Conference on June 11, 2012.

The new version would use Apple's own mapping system with data provided by a number of providers instead of Google Maps, mainly through Dutch manufacturer of navigation systems TomTom. This was a strategic move by Apple to compete with Google's Android operating system in mapping.

Upon release of Apple's iOS 6 mobile operating system, it was met by considerable criticism. Apple issued a statement saying that it is working hard to improve the technology. "We launched this new map service knowing that it is a major initiative and we are just getting started with it," said Trudy Muller, an Apple spokeswoman. "We are continuously improving it, and as Maps is a cloud-based solution, the more people use it, the better it will get.

We're also working with developers to integrate some of the amazing transit apps in the App Store into iOS Maps. We appreciate all of the customer feedback and are working hard to make the customer experience even better."

In January 2012, Apple reported its best quarterly earnings ever, with 53% of its revenue coming from the sale of 37 million iPhones, at an average selling price of nearly $660. As such, in the fourth quarter of 2012, Apple's revenue from iPhone sales was $24.4 billion.

Today, Apple boasts that the App Store has over 700,000 apps for iPhone and iPod touch and 275,000 apps for the iPad. On January 7, 2013, Apple announced that, since 2008, customers have downloaded over 40 billion apps – nearly 20 billion in 2012 alone. See January 7, 2012 press release. (available at www.apple.com).

Apple heavily encourages purchasers to download apps. For example, since the inception of the App Store, Apple has told consumers "[t]he more apps you download, the more you realize there's almost no limit to what your iPhone can do" and has made similar representations regarding the iPad and the iPod touch.

Not surprisingly, the availability of apps has been credited with propelling the popularity of the Apple Devices. Apps are not only an integral part of the Apple Devices themselves, but are the key feature that has differentiated Apple Devices from similar products.

The App Store is under Apple's exclusive domain and the Company has ultimate control of what apps are available for purchase or download by consumers. Furthermore, Apple has designed the Apple Devices to accept apps only from the App Store.

Apple has a checkered history when it comes to delivering services that rely heavily on the Internet. Siri, its voice-activated virtual assistant, was criticized since it came out in 2011 for both outages and its frequent misunderstandings of user commands.

According to a New York Times article, "[a]t least Apple signaled that Siri was a work-in-progress by describing it as being in beta. The maps service carries no such disclaimer and is likely being viewed even more critically than Siri because maps have become such an essential tool for smartphone users." 2 The article stated, [t]he service was blasted for everything from inaccuracies in its location data for businesses to the sometimes distorted imagery of landmarks."

First Cause of Action

Defendant Apple issued written warranties to Plaintiff and the Class wherein Defendant warranted that its Apple Devices were free of defects in materials and workmanship.

In addition, Plaintiff was exposed to representations made by Apple in its marketing materials regarding iOS 6 and Apple Maps, e.g., keynote address from Apple Executive touting the new iOS 6 as a "major initiative" and persistent encouragement by Apple to stick with its products because "the more our customers use our Maps the better it will get." (From: September 28, 2012 Letter from Apple CEO, Tim Cook).

In fact, the Apple Devices at issue are not fit for its advertised purpose of providing a product that contains a Map function which accurately directs the user to the desired destination, accurately depicts landmarks, etc. Despite CEO Cook's September 28, 2012 letter promising improvements, the Huffington Post and several other media outlets reported just weeks ago that Apple Maps directed users across an airport runway.

Apple has had actual notice of the Apple Maps defects by virtue of the media coverage of the problems (e.g. – The New York Times, Fortune, Wall Street Journal), including the hundreds of messages posted on technology websites such as MarketWatch.com, and Gizmodo.com, and by virtue of the filing of this lawsuit. Additionally, as unsophisticated consumers, Plaintiff and the Class are relieved of any notice requirement, and Apple, who has superior knowledge of its technology, is estopped from asserting lack of notice as a defense. In addition, on September 26, 2013, Plaintiffs' counsel provided separate written notice of the faulty Apple Maps to Apple, Inc.

Defendant has breached its warranty obligations by not agreeing to refund the purchase price of the Apple devices to dissatisfied customers and not agreeing to replace without charge all flawed Apple Maps applications.

Defendant's breach of the warranty was a substantial factor in causing Plaintiff and the Class to suffer economic losses and other general, consequential and specific damages, according to proof.

Second Cause of Action

(Breach of Implied Warranty In Violation Of Cal. Comm. Code § 2314)

Defendant had direct dealings with Plaintiff and the Class through its vast marketing efforts. As a result of their direct dealings with Defendant, Plaintiff and the Class purchased Apple Devices from Apple and/or Apple-authorized retailers. Notwithstanding this, privity is not required because Plaintiff and the Class are the intended beneficiaries of Defendant's implied warranties.

By operation of Cal. Com. Code § 2314, Defendant impliedly warranted that its devices are merchantable, fit for its ordinary purpose, and free of defects.

In fact, the devices are not in merchantable condition because the Map application is defective as described above. The iPhone 4 cannot perform its ordinary purpose because Apple Maps does not accurately direct the user to the desired destination, does not accurately depict landmarks, etc., when used in the ordinary course and for the ordinary purpose for which devices were sold.

Defendant breached the warranties by undertaking the wrongful acts herein alleged. The Apple Devices and, specifically, the pre-installed Apple Maps are substantially likely to malfunction before the end of their useful life.

As a result of Defendant's breach of the warranty, Plaintiff and the Class have suffered economic losses and other general, consequential and specific damages, including the amount paid for their defective Apple Devices, according to proof.

Third Cause of Action

(Violation of the Magnuson-Moss Warranty Act 15 U.S.C. § 2301 et seq)

Plaintiff and Class members are "consumers" within the meaning of the Magnuson-Moss Act.

Defendant is a "supplier" and "warrantor" within the meaning of the Magnuson- Moss Act.

The Apple Devices are a "consumer product" within the meaning of the Magnuson-Moss Act.

Defendant's written affirmations of fact, promises and/or descriptions as alleged herein are each a "written warranty" as to the Apple Maps functionality and accurate performance and/or there exists an implied warranty for the sale of such products within the meaning of the Magnuson-Moss Act.

For the reasons detailed above, Defendant breached these express and implied warranties, as the Apple Devices did not perform as Defendant represented or were not fit for their ordinary use. Defendant Apple has refused to remedy such breaches, and its conduct caused damages to Plaintiff and member of the Class.

The amount in controversy of Plaintiff's individual claims meets or exceeds the sum of $25. The amount in controversy of this action meets or exceeds the sum or value of $50,000 (exclusive of interest and costs) computed on the basis of all claims to be determined in this suit.

As Defendant has refused all previous requests, resorting to any informal dispute procedure and/or affording Defendant another opportunity to cure these breaches of warranties is unnecessary and/or futile. Any remedies available through any informal dispute settlement procedure would be inadequate under the circumstances. Any requirement under the Magnuson- Moss Act or otherwise that Plaintiff resorts to any informal dispute settlement procedure and/or afford Defendant a reasonable opportunity to cure the breach of warranties described above is excused and/or has been satisfied.

Plaintiff seeks to revoke her acceptance of the defective Apple Devices, or, in the alternative, seek all damages, including diminution in value of her Apple Devices in an amount to be proven at trial. Class members are entitled to recover damages, specific performance, costs, attorneys' fees, rescission, and/or other relief as is deemed appropriate.

Fourth Cause of Action

In violation of Civil Code, §1750, et seq., Apple has engaged and is engaging in unfair and deceptive acts and practices in the course of transactions with Plaintiff, and such transactions are intended to and have resulted in sales of any merchandise.

In violation of the CLRA, Apple has engaged, and is engaging, in unfair and deceptive acts and practices in the course of transaction with Plaintiff, and such transactions are intended to and have resulted in the sale of goods to consumers.

Plaintiff and members of the Class are consumers as that term is used in the CLRA Act because they sought or acquired Apple's goods (the Apple Devices) for personal, family, or household purposes. Apple's past and ongoing acts and practices include but are not limited to: Apple's representations that its goods were of a particular standard, quality, and grade, when in fact, they were of another, in violation of Civil Code, §1770(a)(7).

Specifically, as described herein, Apple has made the following representations, expressly or by implication to Plaintiff and other members of the Class about the Apple Devices:

that Apple designed the Apple Devices to safely and reliably download and update its apps,

that the App Store does not permit apps that violate its developer guidelines to be sold or to be made available for free through the App Store,

that "Apple takes precautions – including administrative, technical, and physical measures – to safeguard [purchaser's] personal safety," and, (iv) that Apple Maps will improve as more consumers use it.

These representations were materially misleading.

Plaintiff and members of the Class would not have purchased the Apple Devices and/or would not have paid as much for them if Apple disclosed that the above representations were false and if there were aware that Apple Maps would not provide public transit directions, would mislabel restaurants, landmarks, streets, etc., and provide inaccurate directions.

Apple's violations of the CLRA have caused damage to Plaintiff and the other Class members and threaten additional injury if the violations continue. This damage includes the injuries and losses set forth above.

Under §1782 of the CLRA, Apple has received notice in writing by certified mail of the particular violations of §1770 of the CLRA from Plaintiff on behalf of all Class members, demanding Defendant offer to resolve the problems associated with the actions detailed above and give notice to all affected consumers of the intent to so act.

Thirty days have passed since Plaintiff sent the CLRA letter, registered mail return receipt requested, and Apple has failed to take the actions required by the CLRA on behalf of all affected consumers. Plaintiff and the Class are therefore entitled to all forms of relief provided under § 1780 of the CLRA.

Based on its knowledge or reckless disregard of the facts as detailed herein, Apple was guilty of acting with malice, oppression or fraud.

Fifth Cause of Action

Plaintiff and members of the Class have suffered injury in fact and have lost money or property as a result of Apple's violation of California Business & Professions Code §17500, et seq.

Apple's acts and practices as described herein have deceived and/or are likely to deceive members of the Class and the public. Apple has repeatedly advertised that its products were safe and secure. Apple has furthered assured consumers that it closely monitors the appsavailable in the App Store. Instead, Apple has left its customers vulnerable to all hazards which result from inaccurate directions, and flawed maps.

By its actions, Apple is disseminating uniform advertising concerning its products and services, which by its nature is unfair, deceptive, untrue, or misleading within the meaning of California Business & Professions Code §17500, et seq. Such advertisements are likely to deceive, and continue to deceive, the consuming public for the reasons detailed above.

The above-described false, misleading, and deceptive advertising Apple disseminated continues to have a likelihood to deceive in that Apple has failed to disclose that its mapping application does not provide public transit directions, mislabels restaurants, landmarks, streets, etc., and provides inaccurate directions.

In making and disseminating the statements alleged herein, Apple should have known its advertisements were untrue and misleading in violation of California Business & Professions Code §17500, et seq. Plaintiff and members of the Class based their decisions to purchase the Apple Device in substantial part on Apple's misrepresentations and omitted material facts. The revenues to Apple attributable to products sold in those false and misleading advertisements amount to millions of dollars. Plaintiff and the Class were injured in fact and lost money or property as a result.

The misrepresentations and non-disclosures by Apple of the material facts detailed above constitute false and misleading advertising and therefore constitute a violation of California Business & Professions Code § 17500, et seq.

As a result of Apple's wrongful conduct, Plaintiff and the Class request that this Court enjoin Apple from continuing to violate California Business & Professions Code § 17500, et seq.

Sixth Cause of Action

In violation of California Business and Professions Code, §17200 et seq., ("Unfair Competition Law"). Apple's conduct in this regard is ongoing and includes, but is not limited to, statements made by Apple and Apple's omissions, including as set forth above.

Plaintiff, on behalf of herself and on behalf of each member of the Class, seeks restitution, injunctive relief, and other relief allowed under the Unfair Competition Law.

Apple's business acts and practices are unlawful, in part, because they violate California Business and Professional Code, §1750, et seq., which prohibits false advertising, in that they were untrue and misleading statements relating to Apple's provision of goods and with the intent to induce consumers to enter into obligations relating to such goods, and regarding which statements Apple knew, or which by exercising reasonable care should have known, were untrue and misleading.

Apple's business acts and practices are also unlawful in that, as set forth herein, they violate the Consumer Legal Remedies Act, California Civil Code, §1750, et seq.

Plaintiff reserves the right to identify additional provisions of the law violated by Apple as further investigation and discovery warrants.

Apple is therefore in violation of the unlawful prong of the Unfair Competition Law.

Apple's business acts and practices are also unfair because they have caused harm and injury-in-fact to Plaintiff and members of the Class and for which Apple has no justification other than to increase, beyond what Apple would have otherwise realized, its market share and revenue from sale of the Apple Devices.

Apple's conduct lacks reasonable and legitimate justification in that it has benefited from such conduct and practices while Plaintiff and members of the Class have been misled as to the nature and integrity of the Apple Devices and have lost money, including the purchase price of the Apple Device and/or the difference of the inflated price and the price Apple should have charged for a product that fully disclosed the true nature of the Apple Devices.

Apple's conduct offends California public policy, the Consumer Legal Remedies Act, and/or the state constitutional right of privacy.

In addition, Apple's modus operandi constitutes a sharp practice in that Apple knew and should have known that consumers care about the accuracy of maps, but are unlikely to be aware or/and able to detect the means by which Apple and/or its licensors were conducting themselves in a manner adverse to its commitments and its users' interests. Apple is therefore in violation of the unfair prong of the Unfair Competition Law.

Apple's acts and practices were also fraudulent within the meaning of the UCL because they were likely to mislead members of the public.

While Apple represented at all times that, the Apple Devices were safe and secure; in actuality, the Maps application guided Plaintiffs to unknown locations. Apple did not inform purchasers, like Plaintiff, that their Apple Devices may be vulnerable to mapping fallacies such as: mislabeled restaurants, landmarks, streets, etc., and publishing inaccurate directions, but instead, represented at all relevant times that "Apple takes precautions – including administrative, technical, and physical measures – to safeguard [purchaser's] personal safety."

By engaging in the above-described acts and practices, Apple has committed one or more acts of unfair competition within the meaning of the UCL. Plaintiffs and members of the Class have suffered an injury-in-fact and have lost money and property, including, but not limited to, the expected utility and performance of their Apple Devices, the purchase price of their Apple Devices, and/or the difference between the price Class members paid and the actual worth of the product has Apple disclosed the true nature of the Apple Devices.

Apple had a duty to disclose the material content and security characteristics of the Apple Devices and their operations because (i) it knew or should have known about these characteristics at the time that Plaintiff and other members of the Class purchased their Apple Devices because Apple created the Apple Devices and the iOS that ran these devices; (ii) had exclusive knowledge of material facts that were not known to Plaintiff; and (iii) made representations regarding the Apple Devices' administrative, technical, and physical measures taken to safeguard [purchaser's] personal safety but that Apple Maps would lead consumers to unknown, sometimes dangerous places.

Plaintiff and members of the Class were deceived by Apple's representations and cultivation of its reputation for security and innovation and reasonably relied on Apple's representations and omissions as described herein and were consequently injured as alleged herein.

Plaintiff and members of the Class have suffered injuries as a direct and proximate result of Apple's unlawful, unfair and fraudulent business practices.

Seventh Cause of Action

Negligent Misrepresentation

Apple claims to review each application before offering it to its users, purports to have implemented app standards, and claims to have created measures to protect the personal safety of its customers.

However, unbeknownst to consumers such as Plaintiff, Apple failed to properly monitor app makers and to provide accurate mapping information to Plaintiffs. In making these representations to Plaintiff and the Class, Apple intended to induce Plaintiff and the Class to purchase the Apple Devices.

At all times herein, Plaintiff and the Class were unaware of the falsity of Apple's statements. Plaintiff and the Class reasonably acted in response to the statements made by Apple when they purchased an Apple device and updated the operating systems.

As a proximate result of Apple's negligent misrepresentations, Plaintiff and Class members purchased Apple Devices.

The class action noted in our report was filed in the California Northern District Court, San Jose Office. At present, no Judge has been assigned to case number 5:2013cv05332.

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